L.J.
My heart goes out to you and your family. I'm so very sorry you have to go through this.
Your story is very similar to mine last August. My dad was diagnosed with cancer several years ago and then had 2 re-occurances over the last couple of years. They found it in the brain in June and in August realized it had spread further through the brain. My son was 5 at the time and I struggled like you on wether to tell him or not. I did take him to the hospital to visit my dad, even though dad was not responsive most of the time, he would wake up and smile at him and hold his hand and ask him questions. My son attends a daycare that is inside of a retirement facility so had been exposed to people in similar conditions, so it wasn't such a shock to him. I think he knew that things weren't right, but I never out and out told him.
We brought dad home the day before he died, and that night my son sat with dad's wife and just held his hand, he didn't say anything. When dad died the next day I talked with Alex and explained things to him. He understood that papa died, that we couldn't visit him anymore. I got a lot of advise from Harry Hynes Hospice care on helping children his age deal with the death of a loved one. Kid's at this age are matter-of-fact about death. For the first several months after dad died, my son would just suddenly tell someone, stranger, friend, family.....'our papa died'.....it was heartbreaking....but it was his way of dealing with it. When he talks to me about it, I ask only enough questions to make sure he understands that papa is gone and otherwise just let him talk about it, say whatever he wants. He has said things like "I sure hope papa doesn't come back, cause then he would be a scary zombie." Just expect the unexpected.....with kid's this young you just never know what they are going to say and people need to be very understanding of her age, she isn't going to know the appropriate way to express her grief, but she needs to express it in whatever way she can.
My thoughts and prayers for you and your family during this most difficult time. Here is the link to Harry Hynes Bereavement page.....they are incredible people and if you contact them, I'm sure they would send you info to help you with your daughters grief and how to deal with it.
http://www.hynesmemorial.org/bereavement/index.asp